Valuation

Differences in valuation: In SST, real estate is measured at market value, while under US GAAP real estate is carried at depreciated cost.

Differences in scope: In SST, minority interests are reflected in the proportional consolidation of assets and liabilities, whereas minority interests are disclosed in the statement of equity under US GAAP.

Differences in scope: Reinsurance contracts on a funds held basis for company-owned life insurance are reported as policy loans for SST (reflecting a look-through approach). Under US GAAP, those assets are part of the funds held by ceding companies and other receivables from reinsurance.

Difference in valuation: In SST, policy loans are valued by discounting future estimated cash flows at risk-free rates, while under US GAAP policy loans are carried at amortised costs.

Differences in scope: Derivatives and securities lending are disclosed under other assets for SST reporting purposes. For US GAAP, those financial instruments are reflected in other investments.

Differences in scope: In SST, pipeline premiums are part of the re/insurance liabilities whereas under US GAAP, they are included in receivables from reinsurance. Reinsurance contracts on a funds held basis for company-owned life insurance are reported as policy loans for SST (reflecting a look-through approach). Under US GAAP, those assets are part of the funds held by ceding companies and other receivables from reinsurance.

Differences in valuation: In SST, funds withheld for which a fixed interest is credited are valued by discounting future estimated cash flows at risk-free rates. Under US GAAP, they are generally accounted for at face value including accrued interest.

Differences in scope: In SST, reinsurance recoverables are accounted for as part of the re/insurance liabilities. Derivative and securities lending agreements assets are included in other assets for SST, whereas under US GAAP they are reported as part of other investments.

Differences in valuation: SST does not recognise deferred taxes, deferred acquisition costs, goodwill and other intangibles, which are reported under US GAAP.

Differences in scope: In SST, reinsurance recoverables and pipeline premiums are part of the re/insurance liabilities; under US GAAP, those items are reported as assets. SST includes universal life type contracts under re/insurance liabilities. US GAAP discloses those contracts in policyholder account balances. As referred to in the table in the appendix, policyholder account balances for US GAAP are part of unit-linked and with-profit business for the comparison. Pipeline payables and provisions for profit commission and other reinsurance payables are recognised as re/insurance liabilities in SST. US GAAP accounts for those under other liabilities.

Differences in valuation: In SST, re/insurance liabilities are valued using best estimates for both life and non-life business. US GAAP uses locked-in assumptions and makes allowance for possible adverse deviation (PAD) for certain life business. Further differences arise from different treatment of discounting under the two frameworks. SST generally discounts all estimated cash flows based on current risk-free rates, whereas US GAAP does not discount for non-life business and generally uses locked-in historical discount rates to discount life business liabilities.

Differences in scope: SST unit-linked and with-profit liabilities are compared with US GAAP policyholder account balances which include in addition universal life type contracts.

Differences in scope: SST shows all debt, including contingent capital instruments, as debt. US GAAP classifies certain contingent capital instruments as equity.

Differences in valuation: SST excludes own credit risk in the valuation of debt not qualified as SST supplementary capital. SST supplementary capital instruments are fair valued. US GAAP generally values debt instruments at amortised costs.

Differences in scope: In SST, pipeline payables and provisions for profit commission are reported under re/insurance liabilities, whereas for this comparison, they are included in other liabilities for US GAAP.

Differences in valuation: Deferred tax liabilities are not valued in SST, whereas under US GAAP they are part of other liabilities.